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February 25, 2015

Venture Funding Reaches Highest Level in More Than a Decade

Last month, the National Venture Capital Association (NVCA), a trade association representing the U.S. venture capital industry, released the results of its MoneyTree Report on venture funding for 2014. The report, which is prepared by NVCA and PriceWaterhouseCoopers LLP using data from Thomson Reuters, indicates that venture capitalists invested $48.3 billion in 4,356 deals in 2014, which constituted a 61% increase in dollars and a 4% increase in deals over the prior year (see chart below, which shows total venture funding from 2005 to 2014; data from NVCA; click on chart to expand).

Last year, the software sector reached its highest level of funding since 2000, with the sector capturing $19.6 billion in funding (a 77% increase in funding over 2013). The software sector also accounted for 41% of total venture investment in 2014, which constituted the highest percentage since the first MoneyTree Report was issued in 1995. Biotechnology funding in 2014 increased to $6.0 billion, which was a 4% increase over biotechnology funding in 2013, and which was good enough to place the biotechnology second among all sectors. Life Sciences funding (which combines the biotechnology and medical device sectors) reached $8.6 billion in 204, which was the highest level of Life Sciences funding since 2008. Life Sciences funding accounted for 18% of total venture capital investments in 2014. Overall, fourteen of the seventeen sectors tracked by the NVCA saw increases in dollars invested in 2014.

The report also noted that in the fourth quarter of 2014, $14.8 billion was invested into 1,109 deals (see chart below, which shows venture funding by quarter from 2011 to 2014; data from NVCA; click on chart to expand).

In the fourth quarter of 2014, the software sector remained the top sector, capturing nearly four times as much venture funding as the second sector (media and entertainment), with $5.8 billion going into 461 deals. The software sector has now held the top spot in venture funding for 21 straight quarters. Life Sciences funding in the fourth quarter of 2014 was up 62% over the third quarter to $2.8 billion.

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